Recent arrests
suggest that Germany remains a hub for sales of prohibited supplies to
Iran that are being used in Iran's nuclear program. Illegal exports are
undermining Chancellor Angela Merkel, who has pursued an embargo policy
in order to prevent a possible war in the Middle East.

Investigators showed up at around 9:30 a.m. on a sunny Wednesday in
August. They wore bulletproof vests as they entered the driveway. Their
superiors had ordered them to take protective measures. The agents held up search and arrest warrants in front of the intercom
camera and waited until the gate slowly opened at this residence in the
upper-middle-class Hamburg district of Poppenbüttel. They had come to
arrest the building's owner, a nondescript older man named Gholamali K.,
and his son Kianzad. The two Iranian-Germans are suspected of working at the heart of a
ring that allegedly supplied valves to Iran's controversial nuclear
program. At the same time, investigators searched offices in a number of
German cities -- in Oldenburg, Weimar and Halle -- and arrested two
additional men. The four arrests are the latest blow to suspected supporters of
Iran's bid to become a nuclear power. Investigations show that Germany
remains a hub for clandestine deliveries to Iran, despite wide-ranging
sanctions.

A 'Focal Point' for Procurement

Iranian-German collaborations have a long history. For many years,
companies like German engineering giant Siemens played an important role
in the construction of the Iranian nuclear reactor in Bushehr. German
mechanical engineering companies rank among the best in the world, and
their products are highly coveted by engineers in Tehran. A recent
confidential situation report by the German Customs Criminal
Investigation Office (ZKA) said that Germany is a "focal point for
Iran's procurement activity" by Iran. The report went on to say that
"preventing illegal exports" represents "a key challenge." Sales of banned high-tech products boost the Iranian nuclear program,
but they also threaten the German government's policy, which is largely
relying on tight export restrictions to head off a war in the Middle East. The means "at our disposal to force Iran to be more
transparent have not been exhausted," says German Chancellor Angela
Merkel, adding that "sanctions are at the top of the list here." Merkel made a promise to the international community. Germany will
"do everything that it can to ensure that trade with Iran will not
simply seek out new routes," she said back in November 2007. This is the
policy that the German government is pursuing in official talks with
the Iranians as well as the Israelis. The chancellor's main argument is that sanctions are an effective
approach. It's a line of reasoning that she uses to counter the
warmongers surrounding Israeli Prime Minister Benjamin Netanyahu, who is
endeavoring to prepare the world for a military strike against Iran.
Just last week, in a speech to the United Nations General Assembly, the
Israeli leader adamantly warned of the danger of a nuclear-armed Iran.

An Image Problem for Germany

If companies in Germany are able to slip through the tightly woven
net of restrictions, this could create the impression around the world
that German companies are collaborating virtually at will with the
regime of Iranian President Mahmoud Ahmadinejad. Such a realization
would largely undermine Merkel's argument. Consequently, there is little
that the chancellor and German Foreign Minister Guido Westerwelle fear
more than the allegation that German support helped pave the way for the
creation of an Iranian nuclear bomb. The products that were to come from Germany this time around are
fist-sized valves that are an essential component for launching heavy
water reactors and bringing them under control. Such a facility is being
built in Arak. The regime is developing a heavy water reactor in this provincial
capital in northwestern Iran -- population 470,000, located 280
kilometers (174 miles) from Tehran. Such reactors can operate with
naturally occurring uranium, making them suitable for countries that
have problems enriching this substance. This reactor was officially
designed for the production of radioactive isotopes for nuclear
medicine, but it also produces plutonium and tritium, which are elements
that can be used to build a nuclear bomb. With the aid of a heavy water
reactor, for instance, India was able to produce the fissionable
material for its first nuclear warhead. Arak is a pillar of Iran's nuclear program. The reactor is on the
observation list of the International Atomic Energy Agency (IAEA) and
would be among the targets if Israel were to launch air strikes. The German agency conducting the investigation has given the
operation the codeword "Ventilator," named after the German word for
valves, Ventile.

A Cat-and-Mouse Game

Investigators claim the deal dates back to 2007, when a man from Iran
named Hossein T. made contact with an engineer named Rudolph M., 78, in
the eastern German city of Weimar. M. owns a company that has
specialized in plant engineering and custom fittings since 1995, and he
is reputed to be an expert in his field. According to federal prosecutors, Hossein T., 48, runs a number of
companies that are closely linked to the Iranian nuclear program. In
2007, T. allegedly received a major order from an Iranian firm called
Modern Industries Technique Company (MITEC). MITEC is a familiar player
in the-cat-and-mouse game between Iran and the international community. The company is responsible for building the reactor near Arak. In June
2010, the United Nations added MITEC to its blacklist of companies
aiding Iran's nuclear program. One month later, the European Union
followed suit and banned the company. Since then, anyone who does
business with MITEC is committing a punishable offense. Hossein T. is suspected of purchasing special components for MITEC:
approximately 1,800 valves in three different models -- some forged,
others cast -- some apparently innocuous, others specially "suitable and
designed for use in nuclear reactors," according to investigative
files. The valves are of vital importance for Arak. The 1,800 valves would
have been enough to equip the entire reactor, and would have represented
a major step toward completing the nuclear facility. The deal was worth
€6 million ($7.7 million) to the Iranians.

Valves from Germany

Investigators say that Rudolf M. and Hossein T. met for concrete
talks by no later than May 2009. Kianzad K., 25, was allegedly also
present during the negotiations -- the same German-Iranian who was
arrested along with his father in August in Hamburg, and has been in
custody awaiting trial ever since. Federal prosecutors believe that the
father and son were responsible for coordinating the project in Germany.
Gholamali K., 59, runs a company specialized in exporting valves and
pumps. According to the investigating agencies, the negotiations were
successful. The first shipment of valves left Germany on Oct. 29, 2010
and wound its way via Turkey to Iran. In the spring of 2009, officials
warned Rudolf M. that Iranian companies were endeavoring to acquire
advanced technology from Germany. M. replied that he had merely received
a "non-binding verbal request for fittings for the oil industry." The
Federal Office of Economics and Export Control (BAFA) responded that
exports to Iran, "even via third countries," could be subject to
sanctions. Investigators allege that M. subsequently provided a fictive end
buyer in Azerbaijan, and that M. must have realized "that the valves
were intended for use in Iran." M.'s lawyer, Dieter Bolz, responds that
his client merely "delivered to Azerbaijan according to contractual
agreement." He says that M. neither had contact with MITEC, nor did
German agencies warn him about doing business with this company.
Furthermore, Bolz said that his client had no knowledge that "the valves
that he supplied were destined for the production of nuclear weapons,"
adding that they were not even suitable for use within the reactor core.
A few days ago, the engineer was released on a bail bond of €40,000
pending trial. A second shipment of 655 standard industrial valves worth nearly €1
million was allegedly purchased from an entrepreneur in the eastern
German city of Halle who had close contacts with Gholamali and Kianzad
K.; 51 valves reached Iran. The businessman from Halle and father and son K. also purportedly
played a role in the procurement of a third model, which was
specifically designed for nuclear facilities. The order was reportedly
organized in Germany; the valves were forged and cast in India, and
delivered to a company with headquarters in Turkey -- presumably to
cover up the export of the goods to Iran. According to customs
officials, between the fall of 2010 and spring of 2011 a total of four
shipments were sent to Turkey, and later to Iran, but there were
disagreements over the quality of the goods. Apparently, not all of the
valves had been correctly manufactured. Neither Kianzad and Gholamali K.
nor the businessman from Halle wish to comment on the allegations.

A Key Role in the Mullah's Procurement Network

The "Ventilator" investigation is also so politically charged because
Hossein T. presumably played a key role in the mullahs' procurement
network. Investigators hope that they can use his contacts to uncover an
entire network of companies that supply Iran's nuclear industry. As long as German agencies are able to uncover supplier rings such as
"Ventilator," Merkel and Westerwelle can argue that effective controls
are in place. But what about the exports that cannot be stopped -- and
those that the Americans and Israelis track down? They are a source of
embarrassment for the German government. Every few months, delegations from the Israeli foreign intelligence
agency Mossad and the Israeli Foreign Ministry visit officials in
Berlin. They present documents to prove that German companies are
supporting Teheran. The pressure is mounting. In 2008, Israel managed to
push through a ban on exports of German heavy trucks to Iran. In 2011,
following months of pressure from the Israelis and the Americans, the
German government and the European Union closed
the Hamburg-based European-Iranian Trade Bank (EIHB), which was the
last financial institution that Iran was able to use for transactions
with Europe. An event in February 2011 provided some insight into the pain that
the sanctions inflict on the regime. In return for the release of two
arrested German journalists working for the mass-circulation Bild am Sonntag
newspaper, Westerwelle had to personally travel to Tehran. Images of
the German foreign minister shaking hands with President Ahmadinejad
went around the world. This was the visible price that Westerwelle had
to pay. But behind closed doors, the Iranians demanded more from the German
government than just a handshake. They wanted the Germans to ensure that
Iranian aircraft could once again refuel with sufficient quantities of
kerosene at German airports. Iranian top diplomats also urged the German
government to release roughly $1 billion in frozen accounts at the
European-Iranian Trade Bank. India had deposited the money in payment
for oil deliveries from Iran. At the meeting in February 2011,
Westerwelle agreed to consider both possibilities, but one and a half
years later the sanctions are stricter than ever. The tightened embargo measures apparently came too late to halt all
of the valve shipments destined for Arak. Two weeks prior to the arrests
in Germany, on Aug. 1 inspectors from the IAEA traveled to the Persian
Gulf. They checked on the reactor construction project in Arak and noted
that a pipe system for cooling and regulating the pressure had recently
been installed -- presumably with valves from Germany.